Home Buying in 90064>Question Details

Leo Sosa, Both Buyer and Seller in Culver City, CA

How can I determine the land value of a property? Is the tax assessor's information good enough?

Asked by Leo Sosa, Culver City, CA Fri Jul 9, 2010

The property is located in West Los Angeles, next to Rancho Park area. The zip code is 90064. The reason I'm asking is because the house on this paticular property is a complete rehab.

Thank you,

Leo

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Answers

8
No.

The tax assessor's information is not good enough. It may never have been accurate. Assessments are done for tax purposes, not to accurately determine the market value of a property.

Besides, if you're looking at doing a rehab, you're approaching it from the wrong direction.

If you're looking at a rehab, the first question is: What will the property be worth after it's fixed up?

Second question: What are my rehab costs going to be?

Subtract the rehab costs from the ARV (after repair value). (I'm oversimplifying a bit.) The number you come up with is the most you can spend. You probably should pay quite a bit less.

Note that when you ask the first question--what the property will be worth after it's fixed up--you're taking into consideration land value as well as the value of improvements--the house itself.

But always, always, always follow that process. Begin at the end: What it'll be worth. Then reduce it to account for repairs, financing, risks, hassles, transaction costs, and so on.

Hope that helps.
2 votes Thank Flag Link Fri Jul 9, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Get an agent to give you the average price per square foot of the homes within a 1 mile radius search, or if you can within the same housing type. 6 months of history should be sufficient - then subtract out the average improvement square footage X average price per square foot, and you will get the value for the land. A better way would be to pay for an appraisal. That $350.00 spent will give you something that can be used if you are flipping, to the buyers bank, if there is an issue.
Web Reference: http://homevalue911.com
1 vote Thank Flag Link Fri Jul 9, 2010
Dear Mr. Sosa,
Normally the county Tax Assessor's evaluation of the value of the land is on the low side, as is their view of the value of the Real Estate. Market value is higher. My opinion is that given the location,it would be wise for you to have a CMA done to assit in determining value, comparing other residential lots that have sold, in the immediate area to your property . If you want to go further, a licensed appraiser would be a good choice as their evauation of value is the most accurate.
0 votes Thank Flag Link Fri Jul 9, 2010
Hi Leo, Next to Rancho Park in the 90064 zip could be a huge difference where. IF the property is north of Pico Blvd the value will be a lot different than if the property is South of Pico BLvd or if it is West of Westwood Blvd as examples. The 90064 zipcode has many micro pockets of values.
If you need help in identifying the true value please contact me directly with the exact address and I will be happy to give you the value.
Warm regards, Endre
Web Reference: http://www.endrebarath.com
0 votes Thank Flag Link Fri Jul 9, 2010
Beyond finding out what the current value of the land is, you should be looking at the trending values for land in West LA/ Rancho Park. It's a good idea to use comps from 6-12 months back, but a better question is, what does land value appear to be doing, month over month. If the overall trend is upward, and you have the capital to invest in the property and new improvements, you can afford a little more room on the offer price. If the land values are trending downward, and your rehab will take a year to complete, you need to project the loss of value into the costs.
All of that data is available to you via my web site, or I can email it to you for your review.
Best,
Deborah Bremner
REALTOR, 00588885
(D) 818.564.6591
TheBremnerGroup@gmail.com
Blogging at: http://TheBremnerGroup.com/blog
0 votes Thank Flag Link Fri Jul 9, 2010
Tax assessor info is not good for determining the land value of the type of property you are refering to,

You should contact an appraiser familiar with the area where the property is located. There are two common methods used to determine the land, or site value. Sales comparison method and extraction method.

The sales comparison method would involve finding comps of similar land properties, with or without similar amenities such as size, location, utilities (existing or available), usage, accessability, terrian, and perminant affixed improvements such as fencing, landscaping, driveways, building foundations, etc., and making necessary market adjustments for notable differences and market area concerns such as environmental and/or external obsolesences.

The extraction method would involve appraising the property "as is" using comps of similar properties with similar amenities, including structures similar, lesser then, or greater then the existing structure of the property being appraised, and making necessary market adjustments for differences including quality and condition, and developing the cost approach to determine the replacement/reproduction cost of improvements then extracting out the land value, which would be the difference between appraised value and replacement/reproduction cost less, depreciation of existing useful improvements.
0 votes Thank Flag Link Fri Jul 9, 2010
Don's answer is a good approach. However, given that you are asking this question I expect that you are just beginning in the world of development. For this reason, I would recommend that you consult with an appraiser who is familiar with development and can provide you with an idea of the possible construction costs as well as the value of the land, both to you and to the market.

You can contact me if you need a referral for such an appraiser.

Good Luck,

Ray
0 votes Thank Flag Link Fri Jul 9, 2010
Tax assessors information will not be up to date. You need to have a detailed market analysis done by your realtor with the idea of coming up with a value without the existing structure. You have to look for land sales and other tear downs or heavy fixers that have recently closed.

If you are in need of an expert for this, please contact me anytime.

Sincerely,
Jeffrey White
323-251-2296
J White Properties
Keller Williams Beverly Hills
0 votes Thank Flag Link Fri Jul 9, 2010
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